CYBE - Earnings call transcript Q2 2022

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Operator

Please standby. Good day. And welcome to the CyberOptics Second Quarter 2022 Earnings Conference Call. Today’s conference is being recorded. At this time, I’d like to turn the conference over to Dr. CEO. and President Kulkarni, Subodh Please go ahead.

Dr. Subodh Kulkarni

afternoon. Thank CyberOptics for in thanks conference you. call XXXX. Good earnings of for participating quarter And the second

this regarding Officer, made release. to for forward-looking overview remarks. Regulation of number to outlook Jeff risk you and recent of performance. our reflect future Exchange results and discussed for statements results, that is our our discussions will our XXXX, these forward-looking factors. filings a questions review some who be FD, XX, at XX-K in then Operating conclusion pleased other risks in and my me afternoon’s with our Commission. to your the will with These we We earnings December In Securities of our year following Joining detail, our Form urge statements which keeping We have outlook review answer Bertelsen, in is of ended Chief CFO the are subject the

Turning the second performance, now period. in the XXXX. for were Sales previously financial operating of upper guidance CyberOptics sales at and announced to this reported of quarter results our strong our end recent

strong and of Our systems value yield sensors, robust performance the sales high recorded inspection consistent improvement products. recognize last levels double-digit process the semiconductor in and and benefited wafers sensors margin were in XD and as growth XD to from continue year’s unique manufacturers second our significant this of with quarter. Sales largely

of our sensors inspection capital sensors. advantages bodes are equipment is SMT full to ongoing advanced also XXXX. anticipating of we enabling semiconductor Driving our $XX.X XXXX, $XX.X X% semiconductor high-end of are the MRS-based The share, leadership our $X.XX an well diluted ahead, results. operating million in year performance of for quarter quarter. and of of million $X.XX the diluted steadily acceptance these in in quarter and record XX% XXXX second quarter from We positions or the million increase second our This long-term year million earlier and for earnings in XXXX. share or build markets. income competitive the was products operating increase development from of reported targeted for results $X.X of the second per CyberOptics $X.X systems an growing Looking XD Net sales of per the

will from margin the a Jeff by gross few earnings our was our increase sales in be discussing minutes, an strong stemming growth in driven in improved As mix. part

briefly and OEM of I’ll Sales the the WaferSense WaferSense $X.X There’s second our quarter declined Increasing to Now of in XX% million. XXXX, our the in is sales. year-over-year customers. semiconductors global MRS sensors of driving for awareness in combined increased XX% year-over-year principally category, line fluctuations million. XXXX of are each to customer to this with a Within demand X% XD $X.X $X.X demand from families. the for growth minutes, sensors sales increased products semiconductor of next performance of the million in second the quarter product normal review XD few XD reflecting sensors year-over-year record

week, last we products the ship fourth quarter. the to new for order $X.X is that Within WaferSense expected received a in million

SQXXXX in orders Sales up half the Multi-Function Based in out quarter of of strong and from for second systems, have the to with sales the anticipate year-over-year receiving $XX.X customers, systems which of related to sales rose prospective posted or We increased of SQ million expect late Record to year early upon WaferSense second mini-LED metrology XXXX. This of we million. earlier current QX. SQ XX% was period. million, contribution which QX been sales driven of were the throughout by achieved without level new $X.X from to the significant balance inspection systems in a pushed robust remain XXXX. and record X% XXXX growth inspection mini-LED applications, related $XX.X discussions

Second Final systems. Inspection $X.X quarter sales of million Vision system XD also MXXXXX included

second increased During of XD customers $X.X that this million XXth. from quarter at backlog received orders we MX are -- our MX recurring June million $X.X year, to that

to MX as is be and year’s Our backlog presently revenue this quarter. expected in recognized quarter fourth third

remaining MX MXXXXX to system have ship products. use does our We memory manufacturer agreed a large not demonstration to currently that the

early million to of year’s $XX.X the from CyberOptics $XX.X up XX, June in XXth are XXXX at in successful June $XX.X additional this which backlog sales million is We XXXX. a million of to take a hopeful and first lead June backlog MX our quarter will future million, record that demonstration, XX, at XXXX sales. periods. end at place applicable will reached $XX Approximately XXXX,

are XXXX. We for record to compared the $XX ending of third of million $XX $XX.X to of sales third reported million quarter forecasting the in million XXth, September quarter the XXXX of sales

XXXX expect second year strong revenue and of we record full you. ahead, to for wrap with leading results up the Thank operating to half Looking profitability, XXXX. growth

performance will detail. second in Bertelsen quarter Jeff our Now review greater

Jeff Bertelsen

Subodh. Thanks,

mix. in more ASP margin was in up Our Margins large in sensors gross part quarter sales first this also XXXX. mix margin the a up the of and year’s in to representatives the and were due our quarter percentage sales larger representing U.S. third-party system demanding XX.X% quarter in of an second in SQ sales to more on our up from of second higher reflecting from in total due applications sales gross XX.X%, increase percentage XXXX year-over-year SQ The XX% WaferSense was sales through margin our proportion in improvement

roughly increased the of higher expenses the third-party The operating commissions, to Total sales channel quarter quarter XXXX amortization overall were basis third-party new expenditures was and $X.X of particularly basis in from $XXX,XXX R&D Depreciation this WaferSense to level expense totaled through sales. in by $XXX,XXX. XXXX to to and the system margin is part increase XXXX in points decrease reflecting million. expenses and forecasted third increase of in flat quarterly of are third up the for due reps. quarter year’s compensation system quarter the gross expense new in on stock due second points quarter investments XXX basis. higher to and the and due came of higher Total be sales a and products to XD a second of XXX MRS mix to operating sensor XD expected sensors. XXXX percentage to Our in second sequential MX sales

to tax of tax in amortization requiring income GILTI U.S. change and was subsequent effective six income eligible law first and rate favorably increasing of a capitalization due R&D and expenses. amount FDII was the XXXX Our of an XX% impacted for by for months benefits

most million have likely the favorable cash our $XX.X year’s and to While the and at totaled XX, change rate XXXX, it effective XXXX. $XX.X for at on of is a later years. expend this securities expected XX, we marketable income XXXX, Jun of the particularly first amount in increase impact quarter million in and compared taxes, to at tax end Cash $XX.X XXXX will million December

leading impact going growth business do are at the resources and had capital We half first expect period questions. a long-term to not expect now We as very significant our happy the and time, you. results your for forward. record our progresses. have CyberOptics, XXXX. for adequate delays anticipate good major shipping cash months we take our to to-date, increase year to be impact We remain We about and for Part of a achieving results the shortages about six optimistic believe potential. be good objectives. Thank not another for our on second operating the full actual growth We feel would XXXX this our year very

Operator

Instructions] Thank you. Craig-Hallum. And question our Greg will with come [Operator Palm first from

Greg Palm

Jeff. here, Yeah. Subodh Thanks. good Congrats the on results and

Dr. Subodh Kulkarni

Thanks, Greg.

Jeff Bertelsen

Thanks, Greg.

Greg Palm

maybe just that of good really quarter, -- orders doesn’t doesn’t the of with starting you’re seeing good a suggest if broader that a a picture on much landscape, to kind suggest really I good slowdown. you’re guide, any guess really

So…

Dr. Subodh Kulkarni

Yeah.

Greg Palm

… understand maybe from potential industry gains? you’re us out -- the general growth just much share help seeing versus how contribution there, what’s what

Dr. Subodh Kulkarni

Sure.

electronics high a be still semiconductor the the slowing level, but growing. at market seems So, both down, to and CapEx

from come healthy but rate. last it’s rate positive has growth a the So year, growth down and

I in will capital overall reports calendar that XX% latest this rate seem are think suggest and seeing somewhere to market still the X% electronics XXXX. to we the year, grow the semiconductor

the a level. So that, macro at XXXX, Within broader of half our in first obviously, that’s XX%. grew sales

the anyone will our So, that compete to indicate in outperforming be penetration market don’t like gain will compete be clearly, or WaferSense where products we effectively. seem share better market we with

numbers. So pretty about good we feel our

to at is As record you continues continue very still the a very healthy. backlog to healthy. Orders look Orders be see, level. can

expecting are that we some X% broader there far, macro we realized dominate future slowdown to so answers slowdown, But our least any business. your and growth. at significant seen Hopefully will macro definitely to is market conditions we XX% question. the but in still results not So, deliver have the

Greg Palm

Yeah.

of how end into if how that trying think expecting think I of or much visibility point? you -- it at depends orders that’s some this when looks given you’re how QX the about levels, more company versus on Just at maybe the also backlog QX get, mini-LED your dig of that specific categories. We into What’s to other good. can maybe kind QX?

Jeff Bertelsen

we’re for some have certainly, on QX. starting orders to visibility it’s, mean, books some do We get I the QX. into

order mentioned, I up for didn’t that very get a the is nicely. which WaferSense shape We think, Subodh QX starting to nice order QX. So, is

that’s and us year definitely feel we’re making So visibility to good is some about up. going the to starting wrap how get

Greg Palm

is any orders mini-LED to some QX, And resumption what that of and the and those year? about concerns the into as you those what next specifically it of relates into could pushed visibility those in continue sort expecting get late talked to --

Dr. Subodh Kulkarni

that out, other our controlled they are outside a always China may that external factors being risk pushed by it’s lockdowns in because completely control. get and There’s

telling orders QX lockdown resume control. tail even on the continue and outside situation, our because again, talked But that QX. So factors many things just the you the towards China the to of customers about or their end lockdown, of improve us side, of side are that are supply COVID assuming will

about slip high at XXXX So run do nothing rate feel a possibility But to further. mini-LED. in things commentary healthy there’s and our overall that based growing a has level we on is that always may orders good XXXX with

So about healthy at this year even very feel good delivering we without pretty point. orders a any mini-LED year, this

Greg Palm

would or likely And you revenue XXXX to for late to were just at would be calendar QX QX, in be rec recognition in early those receive the some whether QX if rev orders or those point? clarify,

Dr. Subodh Kulkarni

should towards on get we we those want. most the orders in tail QX. depends usually they recognize QX or early with timeline how on it they of them exactly assuming end many systems QX, be come able And a But to So that too. of

same to not them multiple at So systems for install sometimes because practical it’s either. the time

to articulate can try be the -- So in. is to the order start comes when some lag best the a there we over it orders We’ll going of usually kind there. coming when

Greg Palm

Okay. Makes would customer. on last development? before have demo a us, sense. other ever -- commentary in or and -- just that And that your you I anything what have this MX memory one, remind then customer demoed they been just to you have talking to is new large the call

Dr. Subodh Kulkarni

-- applications. our They also first are memory The new is They all, a systems product. this New using obviously development. is use person’s large their manufacturer. of SQ every definitely, customer for

they well. us know So fairly

So we talking a them to while. for are

in have but they in shown interested has XD that had they interest are not any far, not systems, they memory inspection any model shifted, now. shown So --

development is we So positive as as can far a tell. that

they my these demo to comments, as will system investment. So time. why show things to that that get a mentioned long good their take them And usually in return was I agreed on we

results. this So will beyond XXXX impact and

XXXX. We in customer are any to sales that expecting not

Greg Palm

Understood.

forward. Okay. there. I’ll it luck Thanks going and leave good

Jeff Bertelsen

Greg. Thanks,

Dr. Subodh Kulkarni

Greg. Thanks,

Operator

come our Orin AIGH will [Operator next from Hirschman Investment Instructions] And Partners. question with

Orin Hirschman

and Hi. the bookings Congratulations well. on results as

Dr. Subodh Kulkarni

Thanks, Orin.

Orin Hirschman

really in we’ve versus were WaferSense more the on on often build steam. the up announced build, lag now point enough said the Are builds WaferSense ago. a new between the picks So that where the fab announcement we that at there’s months when

up that that steam? WaferSense So is now picking

Dr. Subodh Kulkarni

you -- are correct. have We

built. next if latest WaferSense I WaferSense will order. this know in order, due past the slow a course and down But of That is We Orin, have about being interestingly, like fab. That’s year. will the orders lag time in we some talked seen still $X.X in million only

So construction of that see customers we starting were process. part to surprised in WaferSense early some are pleasantly the fab to accept

there fabs know, many different U.S. we the world, that being the now. as in speak you right as of including parts built are Now are

least the and at compared that WaferSenses to lag building. having this seeing right, understanding in WaferSense So customers WaferSense product started in as of it start to good fab to seem a But hands a is lagging be to value when on opposed just processing on even product. seen have historically, the a some being day case, we proposition But are start wafers. enough you’re one we leading

Orin Hirschman

or Mill, terms the product, goes very along? product profitable just that And that UB I very but with of coming in and still [ph]. believe it’s Steppers for know along WaferSense I How’s very that AS proprietary? small,

Dr. Subodh Kulkarni

So our internal sensor, I to IPS particle believe referring which… product, Orin you’re our

Orin Hirschman

Yeah.

Dr. Subodh Kulkarni

… pumping EUV. into the systems for

are we So testing.

is have product, in are large production be correlating But count enough customers still with purchased into make their again, well This this for the They expensive We we of equipment in EUV downtime customers critical particle data the the that the and a the seems hour have events comfortable their significant small is EUV two maintenance that sensitive become that reporting every of systems part continuing multiple to are their who piece fab collect right have of to is because extremely the early most for production. to they They are an process. operation. collected volumes. deal using themselves those data, chamber in feel going now, very customers. have very

XXX% and their to before procedures EUV, want data. accurate we be are downtime reporting in that maintenance sure So change they they

is that continuing. collection and So performance correlating process data their with

it. So our far, all are out getting they value particle the is count and of results suggest good that accurate

So Does question? are at late lead this to a we least XXXX your maybe that it very is looks XXXX. in and promising. overall, going answer significant XXXX to in But, that opportunity optimistic or

Orin Hirschman

Yeah.

them to be gradual? or placements one two going see, for more it’s an would that that, like, one Just be orders event of are or we going announceable follow-on to

Dr. Subodh Kulkarni

that was I times rare from small which usually customer, they’re we WaferSense of smaller. historically, This disclosed don’t why commentary. is know orders -- smaller typical release yet. earnings But, $X.X the historically, our million are when we one chunks. come got one in in But order

quite So they we are not sure will order is… how IPS. That

Orin Hirschman

Okay.

Dr. Subodh Kulkarni

chunks. or smaller …one big chunk

Orin Hirschman

in delays system for inspection, is last eventually inspection, there and there to And to change they micro-LED -- actual the that the end programs, have are customer the Is opposed amount the question is do put mean, lockdowns roadmap? any time their that forward in just because you change delays. the -- on the any I want any for programs of mini-LED you change of been wide in as

Dr. Subodh Kulkarni

what of. much is us know From telling year. Not they’re us, told this that we plan very what earlier still they had

from last our product lineup they has they us thing that initial So delayed, Clearly ago. to that input have The obviously, are late come only a haven’t. expand time been mini-LED. continuing orders has their we long year already would were to expecting in

delayed nothing on So But locked timeline launches. as are they’re availability as telling some China, far just of it in that changed, issues us, front. have product telling newer parts down has us delayed been they the has the that

Orin Hirschman

Okay.

Okay. Subodh. Thank you,

Dr. Subodh Kulkarni

Orin. Thanks,

Operator

from comes Slade The [Operator Acme. next question Instructions] Eric with

Eric Slade

quarter Nice Nice... Subodh, Yes. fellas, Jeff.

Dr. Subodh Kulkarni

Thanks.

Jeff Bertelsen

Thanks, Eric.

Eric Slade

perfectly. But how have heard micro-LED. about the presentation, start booked the I January? many your, you much call in since out have the think, micro-LED, I’ve booked you when you I talked mini Subodh, -- one let’s -- with in So part

Jeff Bertelsen

about Are -- you I talking Eric? talking assume revenue, you’re

Eric Slade

Yes. Yes.

Jeff Bertelsen

The That’s not a revenue value about is ton. $XXX,XXX.

Eric Slade

it. Got

really because Is lockdown parts it -- combination been is So China’s the it delayed of both? fact or also. it’s of mainly or mostly parts a and

Dr. Subodh Kulkarni

us tell it’s What they both. of a combination is

Eric Slade

are -- micro Taiwan mini you? micro-LED, of answer know is And China assembly there Of what Subodh, China, that’s in percentage in or this. you could that you what is some in probably have all or understanding mostly the Okay. lines do my

Dr. Subodh Kulkarni

in we that populated in have now are XX on production Taiwan. all going so They’re is roughly all is there China. in that about the and -- lines lines is far. right final But There production volume

Eric Slade

your company understanding equipment get to you figure they What’s your June product, to this And mini October. could product Okay. they Xst. -- in the delays, was this to my out, a equipment, they the it December within place? pointed say, guess Is very do look to large the like in that on micro, consumer have by Jeff, think, two get I lag of I launch because time? let’s of might talked and inspection the out, that people now need out And get months this inspection a want

Dr. Subodh Kulkarni

time a weeks lead six Our now to order. four weeks for about is right new

receiving the the order. can good reasonable four order, So for mean, should of feel that SQ system, weeks order a able I long that be as is system, fulfill system standard we we fulfill SQ is which we size pretty is, close within that mini-LED SQ to the to the standard

Eric Slade

which this, one up floodgates all the product, first fourth big big when So of the and this this would that’s really year, thinking year excuse by quarter, I next the could end in or, open think? once dumped is pent-up -- the or quarter about pretty it’s on just December me, also

Dr. Subodh Kulkarni

certainly a in we obviously. lockdown. QX, see We just know. I China huge COVID mean, I challenges, supply don’t would this earlier, like mentioned to demand come

So far…

Eric Slade

Right.

Dr. Subodh Kulkarni

and things will control obviously… our delay those continue it control happen. outside if even then customers to our obviously that We … launches, not

Eric Slade

Right. Well…

Dr. Subodh Kulkarni

…think control. that under come when things

Eric Slade

ballistic, the know but just matter can’t you gross, you Well, it’s control go a of that. like, yeah, when,

year, I other covered order the know had one don’t have on know I you you was for big yet. how -- But -- placed if you is much that I question that earlier was WXXXXX. in to correct? the The

Dr. Subodh Kulkarni

Yeah.

we China system But have before also that one disclosed But sensor keep we sales. the in name. order their sells software and a have case, under basically the booked that, the We have system. WX only we in for that finished mind, partner WX in

now. of couple those are -- So have in large and the Chinese one getting traction customer with right a pipeline they we are they

large or are to and three We feel potentially about good the now. in right have getting in IDM We we from few then order other have talking this full that them orders two months. the one customers quarter a next fulfill some from two pretty we

Eric Slade

be as we this, with think, is out isn’t talk in when -- on get this XXXX out -- in the you out smartphones, guys WXXXXX. very micro-LED that mini is is, you this maybe market, as used and is are the I get way And device bullish for the for get obviously, right? which to XXXX, we this think I about will so this the to biggest I the big guys

Jeff Bertelsen

Yeah.

as to for mean, and product time yeah. need new type -- Nano as end mini-LEDs. for think I evolves, our that sensor will we higher I use

evolves, time as So yes.

Dr. Subodh Kulkarni

I current… mean, the

Eric Slade

And…

Dr. Subodh Kulkarni

SQ, we use time reach we LEDs That’s able technology. product, space, will be product, we next-gen …mini-LED fulfilled plan mini-LED. That’s XX the potentially the is is our smaller to to become with microns regular reflective surfaces. from microns micro-LED, mini-LED of launched apart next-gen be have the WX in right, XX the each Nano handle the to to reasons your SQ+. already by XX developed product. will when the That MRS and XX Eventually, other. which LEDs we one and and microns lab on which main microns That we question sensor when in

in SQ our in accurate… figure product, being, sensor how like We on take so the in WX to don’t complex that So Nano out system. but our we very out move system, take MRS we move to to need difference how to the SQ a sensor sensor main figure it Nano the WX put the And MRS MRS in we need -- product. sensor

Eric Slade

Yeah.

Dr. Subodh Kulkarni

out. moved Nano has MRS sensor physically

Eric Slade

estimate again market? two now? that not is XXXX smartphones a and reasonable, seeing actually, down once consumer if from locked Is year China at that years micro-LED point timeframe the for biggest decent well, mini, calendar have Is the

Dr. Subodh Kulkarni

this little that we given delays a I have may aggressive would seen say year. the are you be

Eric Slade

That’s why Yeah. I Right. figured.

Dr. Subodh Kulkarni

a a of which like your directly smartphone XX display micro-LED, on for micron final think is glass what becomes that devices. in your other or I piece LED

too I bit aggressive think XXXX may be a timeline.

I more -- XXXX we’re more it’s looking maybe at now. that think right beyond like realistic

Eric Slade

lot are we guys to once. But be memory the is, you My selling. then about of for than memory I guys I side, And I a is assumption? fair one probably, this more think, modules, Okay. replacement this like as understanding on spoke capacity. opposed Jeff, think have once the, that you on the Would a last the

Jeff Bertelsen

a combination it’s really, think I of both Eric.

Eric Slade

That’s what break XX-XX? you XX-XX, you down to said. percentage, that Can what

Dr. Subodh Kulkarni

towards it’s XX-XX, capacity would XX I more say and But… towards replacement. XX

Eric Slade

Okay.

Dr. Subodh Kulkarni

the we numbers have exact figure go through … and out. to

us answer know And to give sometimes that the we don’t question to they all that precisely. visibility need

Eric Slade

the one waiting the in of on Did LED. the number to mini up last of micro know, third you more back micro maybe customers in the for player? side, quarter new we memory any pick how in lines, big WX, a customers? the the new mini And Actually just many the

Jeff Bertelsen

mean, $XXX customer I so any haven’t say, I adds we’ve WX. customer Yeah. I micro revenue, in would this customer On year with should more two really WX, been there say, -- both sensor, booked haven’t adds, there mini only or one yet. certainly, the on accounts, probably a not really a new there been, there nano been than the

on. actual get we some going are are In customer received, starting orders and terms evaluation to very traction exciting of there there

do some we for hopefully, end year the So, of before more we’ll -- customers WX. get the

Eric Slade

Yeah.

Yeah. On cash cash. you products... $XX cash. the the that oh! million guess And On I have -- XX in

Dr. Subodh Kulkarni

made… We

Eric Slade

were now the probably, you’ll and close Is that model balance is the cash And building go if $XX on be Did where there in -- up way think the over sheet $XX Do any say raising not year? you raising, million like, to now. to million kind between $XX end $XX be you’d can of inventory. you you million progressive? generating that’s it, be of thing, we million, you’d it’s because or

Jeff Bertelsen

actually it certainly did into of cash balance when up. obviously, management by a bit ours, June at And most QX. here, you I our goal accounts consideration certainly, year tight a by grow as the the receivable, inventories of to really of to be sheet, time expect see million Yeah. these back start in do reduce inventory the in June -- you where some the But certainly I of mean, wraps the is little receivable, taking chain you really half XX the situation. -- increase we we around see start is $XX will think north and collect supply as to look

Eric Slade

to up year basically, for considering been great mini So wrap it has been shutdown. micro me, has this

pretty get the you us So we guide due at, nice the in surprises, are guys micro-LED, very good later gave obviously, we’re much it’s delayed? year we get looking and to could mini a some been

Dr. Subodh Kulkarni

mean, Certainly, I it say would feel without growth. delivering over level, this good year if high contribution. double-digit be comes and any a at that, mini-LED double-digit mini-LED I pretty we even about growth we that does, above will hope and it

feel we good So about pretty year. the

Eric Slade

it’s coming, come we matter end Well, whatever. of early, this a this will know it just year -- year,

on So, yeah, have progress that. again, no control once, up. But as over progress. Keep great it we I great said, --

Dr. Subodh Kulkarni

Eric. Thanks,

Jeff Bertelsen

Thanks, Eric.

Operator

conclude over the turn any to that question-and-answer remarks. back session. conference for now And does I’ll you additional the

Dr. Subodh Kulkarni

you your for to look in forward QX questions. So updating interest thank our We Thanks you again. after results.

Operator

participation. Have And for your conclude you do day. conference. you. excellent does an We that thank today’s Thank

Cyberoptics (CYBE) 28 Jul 222022 Q2 Earnings call transcript